Apr 21, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


The Ted Spread

RSS By: Ted Seifried, AgWeb.com

Ted is the Chief Market Strategist and Vice President in charge of the Zaner Ag Hedge Group and specializes in agricultural hedging employing various strategies using futures, futures spreads, outright options and option combinations. He believes it is paramount to be able to use different strategies to adapt to market conditions. Ted works with large to mid size grain and livestock producers and end users in North, Central and South America.

Was it a Great Day to Buy Corn or Sell Soybeans?

Feb 19, 2013

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.   

An unusual day in grain markets today as soybeans were sharply higher while corn and wheat were down.  It really was like soybeans were in their own little world today as they gaped higher and posted an upside breakout.  Corn and wheat on the other hand came very close to producing fresh new sell signals right above lows which would be quite a bearish development.  This sort of activity does not seem likely to persist even as we get further into the acreage discussion.  So, the question is are the soybeans predicting a rally for the grains, or was the weakness in corn and wheat suggesting that the soybean rally was a bull trap?

It would be easy for the soybean bulls to say - "look at how strong the soybeans were despite the weakness in corn and wheat", and it would be easy for corn or wheat bears to say - "look how week the corn and wheat was despite the strength in soybeans".  And for the most part they would all be right, however these sorts of disconnects or divergences typically are not of the long term variety.  So the real question here today is - Was it a great day to sell soybeans, or was it a great day to buy corn and wheat?  Time will tell, but looking at the action on the close it seems that at least for now the soybeans still have momentum to the upside and corn and wheat might very reluctantly follow.

Sign up for our Morning Ag Comments: http://www.zaner.com/offers/?page=17

Reports from the floor and the news wires were attributing the strength in soybeans to less then expected rain in Argentina and export interest.  The weakness in corn and wheat was blamed on a winter weather event here in the US and a lack of demand interest.  The interesting thing is that the less then expected rain in Argentina might have been more bullish for corn then for soybeans even thought the board certainly did not reflect that.  The bigger issue for soybeans right now is the annual "can Brazil get product to port" game.  The longer it takes them to get in the export game in a big way, the longer US exports stay relevant.  The next few days / weeks will show us how prepared Brazil is to move soybeans, but I have a sneaking feeling that at these prices they will surprise some by getting their act together quickly.  However, that certainly does not mean that we stop hearing about the horror stories.  Brazil likes when we get all excited about their logistical issues.  They get it sold and shipped just like they do every year, and they get higher prices in the mean time.

CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=tseifrie

March Corn Daily chart:

March Soybeans Daily chart:

March Wheat Daily chart:

All this means that speculators should be looking for opportunities and producers need to look to lock up some prices while we have corn near $7.00 and soybeans near $14.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Please check out my Blog at: http://tedseifriedfutures.com/

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie

Futures, options and forex trading is speculative in nature and involves substantial risk of loss.  This commentary should be conveyed as a solicitation for entry into derivitives transactions.  All known news and events have already been factored into the price of the underlying commodities discussed.  The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION

Log In or Sign Up to comment

COMMENTS

No comments have been posted, be the first one to comment.
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions